is this a squeeze or something fundamental?
The US dollar is sinking fast today with USD/JPY 160 pips below the intraday peak of $147.36. The dollar is similar weak elsewhere and has just hit an air pocket in EUR/USD in a quick move to the highs of the day.
EURUSD 10 mins
The answer to the question, I think, is…both.
It’s clear that market participants have been piling into US dollar as yields looked to break out and both Europe and the commodity block was showing signs of an accelerating recession. What’s changed is that the US might be heading into the same kind of slowdown as today’s data on job openings and consumer confidence rapidly deteriorated.
For instance, EUR/USD has been slumping for a month straight and with US yields down 6-13 bps today, led by short-dated maturities, the dollar longs could be having a re-think.
Ultimately, the pieces don’t fit in the price action today. It won’t last but how it unravels is a different question altogether.